Mitt Romney has taken to saying that he created more than 100,000 net jobs through his work in the private sector, and more jobs as governor than President Obama has created since taking office. But the first claim is unproven, and the second is misleading.
It’s true that the private equity firm Bain Capital, which Romney headed from 1984 to 1999, invested in many companies that went on to add jobs. But there’s no thorough count of the jobs gained and lost in all the companies in which Bain invested. And it’s highly debatable whether Bain, and Romney, deserve credit for all of the jobs created, particularly when there were other investors, executives who launched or ran the companies, and new owners in later years.
As for his time as governor, Romney’s claim is true as far as it goes. But he’s comparing his full four years in office with fewer than three years for Obama. Furthermore, he governed Massachusetts at a time of economic improvement. And he didn’t do that well when compared with other states. Obama took office when the economy was tanking.
100,000 Jobs Created?
Romney long has touted his job-creation credentials. In recent weeks, he has claimed credit for more than 100,000 net jobs.
In a Time magazine interview on Dec. 21, Romney said:
Romney, Dec. 21: "And so I’ll compare my experience in the private sector where, net-net, we created over 100,000 jobs. We created over 100,000 jobs."
He repeated the claim in a Jan. 3 appearance on Fox News’ “Fox and Friends,” but that time said he “helped” create them.
Romney, Jan. 3: "And I’m very happy in my former life; we helped create over 100,000 new jobs."
When we asked the Romney camp for support, spokesman Eric Fehrnstrom sent us a list of jobs added at three companies in which Bain had invested, saying that these three examples alone created over 100,000 jobs: Staples, which had 89,000 employees as of Dec. 31, 2010; The Sports Authority, which had 15,000 employees as of July 2011; and Domino’s, which has added 7,900 jobs since 1999.
That’s hardly a rigorous analysis of jobs gained and lost at companies Bain backed. And does Romney deserve credit for all of those jobs? Bain was but one of several investors in The Sports Authority, which was launched with the monetary help of William Blair Venture Partners, Phillips-Smith and Marquette Venture Partners. Not to mention the work of founding executives at the company, such as CEO Jack A. Smith.
Plus, Kmart owned the company for about five years starting in 1990. Does Kmart get credit for whatever job growth occurred then? In 2006, the private equity firm Leonard Green & Partners acquired Sports Authority. Does Bain, and Romney, still get credit for jobs created after the company is bought or sold years later?
Staples, too, was launched with money from William Blair and Bessemer Venture Partners, two firms mentioned by Staples founder and former CEO Tom Stemberg, who, it could be argued, deserves the most credit for jobs added by the office-supply store. In comments published by CNN Money in 2002, Stemberg said that Bain “gave us a boost” by talking them up to Avery Dennison, an office-supply wholesaler.
Determining who gets credit for how many jobs is challenging, to say the least.
Los Angeles Times, Dec. 3: “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”
And then there are the job losses. Bain took over other companies where layoffs, and even bankruptcies, followed. Romney said that 100,000 figure was “net-net.” So, whatever job creation figure one could use, we’d have to subtract jobs lost, such as 385 jobs cut at American Pad & Paper; 1,900 positions cut or relocated at Dade International; 2,100 workers laid off from DDI Corp.; 2,500 jobs lost at Clear Channel Communications; and 3,400 layoffs at KB Toys. Those examples come from Politico and the New York Times.
Jobs Created as Governor
Romney added a new wrinkle to his jobs claim in that Jan. 3 comment, comparing job creation in Massachusetts when he was governor from 2003 to 2007 to that of the whole nation under Obama:
Romney, Jan. 3: "And I’m very happy in my former life; we helped create over 100,000 new jobs. By the way, we created more jobs in Massachusetts than this president’s created in the entire country. So if the President wants to talk about jobs, and I hope he does, we’ll be comparing my record with his record and he comes up very, very short."
According to employment data from the Bureau of Labor Statistics, employment under Romney’s governorship went from 3,224,600 to 3,270,400. That’s an additional 45,800 jobs. And under Obama, despite recent gains, the nation as a whole still has 1.7 million fewer jobs than it did the month he took office.
But that’s a misleading comparison. It gives Romney credit for a full four years in office compared with less than three full years for Obama. And as we have noted before, most economists say market forces outside the control of governors and presidents largely drive employment gains or losses. So while policies of governors or presidents can certainly affect employment, their record of employment will be strongly influenced by the prevailing economy at the time.
Obama took office at a time when the country was hemorrhaging jobs very quickly. Economists say the business recession continued for several more months, ending in June 2009. Since then, the country has added 1.4 million jobs.
And, as usual after recent recessions, businesses (and state and local governments) continued to shed jobs long after the recession ended and business began to turn up. The job slump continued for Obama’s first full year in office and finally hit bottom in February 2010. Since that bottom, the nation has added nearly 2.7 million jobs.
Unlike Obama, Romney took office during an economic uptick. Massachusetts had a net job growth of 1.4 percent under Romney. However, that was far slower growth than the national average of 5.3 percent. As Romney’s opponents have frequently, and correctly, noted, Massachusetts ranked 47th in job growth over the entirety of Romney’s term. The only states that did worse: Louisiana, Michigan and Ohio.
– Lori Robertson and Robert Farley
Update, Jan. 6: Jobs figures for Obama have been updated in this version to reflect the Jan. 6 release by BLS showing that the nation added 200,000 jobs in December. As originally published, our story reflected only jobs figures through November, which were the most recent available at the time.
BLS also revised figures for earlier months slightly to reflect the agency’s annual updating of the statistical formula it uses to adjust jobs figures for normal seasonal variations.